We propose to develop and apply an overarching conceptual framework, drawn from economic theory, for understanding the roles of purchasers, plans, providers, and patients in a market environment characterized by competition among managed care plans paid by capitation. Managed care greatly expands the dimensions upon which payers contract with health plans and plans in turn contract with providers both contract and compete with each other. Alternative market structures have different effects on costs and clinical endpoints. Our Program Project will improve understanding of these affects. Additionally, we will advance statistical methods that can be used in empirical studies of this topic. We will apply our conceptual framework and statistical methods to 6 applied research projects; 1) How marker structure affects Physician Organizations and their performance; 2) How a health plan's ability to structure a network of hospitals affects hospital performance; 3) How increased HMO penetration and deregulation of hospital prices affects quality of care and outcomes for cardiac and other diseases. Preliminary work suggests greater price competition among hospitals disproportionately increase AMI mortality among the uninsured who are disproportionately minority. We will determine if this finding applies to other disease, 4) How market structure affect payers' decisions to carve out services and the extent to which carve-outs shift costs on to other segments of the health benefit; we will analyze the outcomes of a quasi-experiment among a minority population; 5) Quantifying the extent of selection in a large private employer and determining whether the private sector's minimal use of risk adjustment, the accepted tool for mitigating selection, might stem from effects of risk adjustment on the wage structure that would not be easy for employer's to offset; 6) Whether the modest managed care penetration in rural areas can be explained by the relative lack of competition in provider markets there. We will collaborate with a Hispanic Serving Institution and have devoted special attention to the development and mentoring of junior investigators at all collaborating institutions.